Question

Select the most appropriate alternative from those given below:
Trading A/c is prepared on the basis of ________ expenses and incomes.

• A. indirect
• B. direct
• C. outstanding
• D. prepaid

Answer 1

Answer: (B)

direct

Trading account is prepared to know the profit earned by the firm through the trading activity. Trading account is prepared by considering only direct expenses. Gross Profit depicts the direct profit earned by the firm through trading of goods.

Trading Account

Particulars Amount Particulars Amount

To Opening Stock By Sales

To Purchases By Closing Stock

To Wages

To Direct Expenses

To Gross Profit

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